THIRUVANANTHAPURAM: The liabilities of the State Government increased in 2000-01, resulting in the widening of the gap vis-a-vis assets, according to the report of the Comptroller and Auditor General of India (CAG) for the year.

The report said that the State's assets grew by seven per cent during the year, while the liabilities went up by 18 per cent.

In the circumstances, the report has called upon the Government to control expenditure and enforce tax compliance.

The fiscal deficit declined to Rs 3,878 crore in 2000-01 from Rs 4,534 crore in the previous year. The ratio of revenue deficit to fiscal deficit increased from 0.42 in 1996-97 to 0.81 during the year under review.

The Government's outstanding public debt rose from 81 per cent from Rs 7,583.39 crore in 1997 to Rs 13,729 crore in 2001. The internal debt moved up by 157 per cent from Rs 2,970.85 crore to Rs 7,627.34 crore during the period.

There was a sharp increase in interest payment from 16 per cent of the revenue expenditure to 19 per cent during 1996-2001.

This indicated that the Government finances were under severe pressure, the report said.

As much as 81 per cent of the Government's borrowings in 2000-01 went towards revenue expenditure.

The Government had to stop treasury payments even as it ensured that payments to the employees were unaffected. As a result, there were no funds left for developmental programmes.

The report has stressed the need to improve the Government's budgeting, ensuring tax compliance and controlling of revenue expenditure without which there would be little improvement in the financial situation.